Is Your Business Ready to Face a Lawsuit?

As a business owner, your focus is usually on sales, growth, cash flow, and managing employees. The idea of getting sued is probably that last thing on your mind. Unfortunately, the harsh reality is that 90% of businesses and corporations get sued at some point.

A study conducted by the US Chamber Institute of Legal Reform shows that 43% of all small and medium businesses in the country are either engaged in or threatened with lawsuits.

Dealing with business lawsuit

Reasons for Lawsuits Against Businesses

Many business owners say that litigation almost put them out of business. Worse still is the hit you take on your reputation. And you would be surprised to learn that the majority of these lawsuits are filed either by employees or customers.

1. Employees

One of the critical pluses to working for a small- or medium-sized business is the way you get treated. These businesses pride themselves on treating their staff like family – taking care of them and forging strong relationships that are based on a common goal of making the business succeed.

Unfortunately, there will always be those employees who are never really happy with the way they are treated and so litigate. It could be because they feel they were unfairly terminated or had reported an issue that was not handled correctly by their managers, or they suffered a personal injury while at the workplace.

Here is a list of the most common reasons why employees litigate:

  • Violations of work and salary agreements
  • Hostile work environment or workplace harassment lawsuits that are handled by harassment lawyers
  • Violation of workplace discrimination laws, which means that you will face a discrimination lawyer
  • Personal injury that may have been caused by employee negligence
  • Violation of the Immigration and Nationality Act

Most larger companies have an in-house legal department that is geared to handle such issues. However, for smaller companies, having such a department can be expensive.

2. Customers

Customers are apt to sue businesses for a variety of reasons, of which some listed:

  • A product or service that did not work the way the company promised
  • Discrimination
  • Poor Customer Service
  • Personal injury sustained while the customer was on the company’s premises

Some lawsuits are valid, while many are just plain ridiculous. However, whatever kind of lawsuit it is, it will still cost your company a lot in terms of money, time, and reputation.

Business lawyer processing lawsuit filing

How to Minimize the Danger of a Litigation

Here are a few things you can do to ensure that you minimize your chances of being sued:

1. Protect Your Business and Yourself Financially

If you are being sued, then you need to ensure that the financial repercussions of such an event are minimized. Ensure you separate your personal finances from those of your business.

Also, ensure that you invest in business insurance. For example, general liability insurance can protect your company from some of the most common causes of litigation.

2. Be Careful About What You Say or Do

You never know when what you said or did can come back to haunt you. Do not make claims about your product or service that is not substantiated by proof. Ensure that you have documents and clear employee policies.

3. Have Legal Help

Ensure that you have a lawyer on call who can counsel you on how not to get sued. If there is something that you are doing or going to do, it is best to discuss the legal ramifications with a trusted lawyer to ensure you don’t get into trouble.